China: New Draft Fourth Amendment To The Chinese Patent Law

On April 1, 2015, the State Intellectual Property Office (SIPO) published a new draft of the fourth amendment to the Chinese patent law, for solicitation of public comments. Compared with the last draft which was sent to the State Council for review in January 2013, this version includes some additional changes which appeared for the very first time.

Patentable Subject Matter

Current Article 25 of the Chinese patent law excludes methods for the diagnosis or for the treatment of disease from being granted patent rights. This applies to methods of diagnosis and methods of treatment for both human beings and animals. However, Chinese aquaculture, livestock and poultry farming has undergone significant changes in the past 30 years and there has been an increasing demand for patent protection of innovations in this field. The new draft proposes to allow methods for the diagnosis or for the treatment of disease for farmed animals as patentable subject matter. This proposal reflects the development of Chinese domestic industry and the recognition of the need to amend the patent law to serve the interest of the Chinese domestic industry.

Design Patents

The new draft also includes significant changes related to the prosecution of design patent applications. According to the proposed new Article 2 of the Chinese patent law, "design" means any new design of the shape or pattern, or their combination or the combination of the color with shape or pattern, of a product as a whole or a portion thereof, which design creates an aesthetic feeling and is fit for industrial application. This change allows partial designs, i.e. design for a portion of a product which has not been possible so far. Currently, applicants must limit the scope of protection of a design patent to a specific complete product. For example, even if a design is only for a handle of a cup and the handle could be used for cup bodies of any shape, an applicant has to incorporate the design of the handle into a specific cup body or a limited number of cup bodies in a design application or design patent, as a design patent in China only protects a complete product but not a portion of a product that cannot be sold or used independently. The allowance of partial design protection is definitely a step forward to curb the acts of copying the design of a portion of a product or combining designs of portions of various products and getting away with infringement on any design patent of the complete product(s).

In addition, China is preparing to join the Hague Agreement, and hence the term of protection for design patents is proposed to extend to 15 years in order to meet the relevant requirements in the agreement. Moreover, domestic priority is also provided for design patent applications, which means a design application may claim priority from a previously first-filed Chinese design application within six months from the priority date. This has been absent in Chinese patent law. For design applications, the current Chinese patent law allows only foreign priority, which means claim of priority from a previously first-filed foreign application, whereas both foreign priority and domestic priority are allowed for invention or utility model applications.

License of Right

The concept of license of right was introduced in the new draft, which draws on the German and UK practice. According to the explanations to the proposed amendment published by the State Intellectual Property Office (SIPO), by the end of 2013 only 14.6% of the valid patents owned by Chinese universities and 39.7% of those owned by research institutes were being exploited. This system of license of right aims to create a platform to improve technology transfer and commercialization.

The new draft allows patentees to express in writing to SIPO their willingness to license their patents to anyone and specify relevant royalties. In such cases, SIPO will announce the patentees' statements. Patentees may also withdraw their statements in writing, which will also be announced by SIPO. Where the statement of license of right is withdrawn, the interests of the licensees that previously acquired the license should not be affected. The licensee of the license of right should inform the patentee in writing and pay associated royalties. Patentees of utility model patents or design patents should provide patent right evaluation reports when they offer the license of right. Over the term of the license of right, a patentee is not allowed to grant any sole license or exclusive license or request for preliminary injunction. The new draft further mandates that where the relevant parties have a dispute over the license of right, SIPO has the authority to make a decision. If any of the relevant parties are not satisfied with the decision of SIPO, the party may institute legal proceedings within 15 days from receiving the decision.

Standards and Licenses

The new draft also includes provisions related to standards and licenses. Specifically, it mandates that if a patentee that is involved in the making of national standards fails to disclose the patents it owns that are essential to the national standards in the course of making the national standards, it is deemed that the patentee permits the user of the national standards to use the relevant patented technology. In this case, the patentee has no rights to sue the user of the national standards for infringing its relevant patents. It is to be noted that the user of the national standards may still have to pay royalties to the patentee. The amount of royalties can be decided through negotiation. If the relevant parties cannot reach an agreement on the royalties, local IP offices, the administrative authorities responsible for enforcing patent rights as an alternative to courts and other patent related services, have the authority to make a decision. If any of the relevant parties is not satisfied with the decision of the local IP offices, it may institute legal proceedings within three months from receiving the decision.

Patent Enforcement

The new draft includes many changes to the enforcement of patent rights, in favour of the rightsholders. The new draft keeps the concept of wilful infringement which was introduced in the previous drafts. Repeated infringement or mass infringement, i.e. infringement conducted by a good number of parties, is regarded as wilful infringement which disrupts market order. If wilful infringement is found, the court may double or triple the calculated damages or statutory damage determined by the court. Currently, the upper limit of statutory damage is Rmb1 million (US$161,000). In the case of wilful infringement, this may be as high as Rmb3 million (US$483,000). Of course, if damages can be calculated using the loss of the patentee, the illegal gain of the infringer or by making reference to royalties, it may be much higher.

Moreover, to reduce the difficulty of providing evidence for calculating damages, it was proposed that if infringement is found by the court but evidence is in the possession of the infringer, the court can request the infringer to produce evidence. If the infringer is not cooperative, damages may be determined with reference to the plaintiff's claim and evidence.

Under current Chinese practice, if an alleged infringer is sued for infringement, it could file an invalidation request at the Patent Re-examination Board (PRB) and, under some circumstances, request the court handing the infringement case to suspend the infringement proceeding. The PRB's decision on validity may be appealed to the Beijing Intellectual Property Court and subsequently to the Beijing High People's Court. This could effectively delay the conclusion of the infringement case. The new draft proposes that if an infringement case is suspended because the defendant has requested invalidation of the relevant patents, the courts or local IP offices should resume the relevant proceedings once the PRB makes a decision in the invalidation procedure and the decision is announced. This could hopefully speed up the infringement proceedings.

It was proposed that local IP offices would to be given powerful measures against patent infringement. Currently, local IP offices only have relatively powerful measures against patent passing-off. Specifically, when investigating suspected acts of passing off of a patent, the local IP offices may, based on the evidence obtained, query the parties concerned, and investigate the relevant circumstances of the suspected illegal act; carry out an onsite inspection of the site where the party's suspected illegal acts take place; review and reproduce the contracts, invoices, account books and other relevant materials related to the suspected illegal act; and examine the products relevant to the suspected illegal act and may seal up or withhold the product proved to be passing off the patented product. The new draft amendment proposed to give the same power to local IP offices in handling patent infringement cases. In addition, if the local IP offices find infringement, they may confiscate or destroy the infringing products and equipment used for making such products. If they find wilful infringement which disrupts market order, in addition to the above measures, they could impose a fine up to five times the illegal amount of sales. This draws on the administrative enforcement of trademark rights.

In addition to the above proposals which strengthen the enforcement of patent rights, the new draft also includes provisions that specifically deal with e-commerce-related infringement. The new draft proposes that if an internet service provider (ISP) knows or should have known that its user infringes patent rights using its internet service, but the ISP does not take necessary measures to curb it such as deleting, blocking or breaking the links of the infringing products, the ISP shall bear joint liability. The patentee or interested party may notify the ISP if it finds infringement. If the ISP does not take necessary measures after receiving valid notification from the patentee or interested party, the ISP shall bear joint liability for the enlarged damages. Local IP offices may also ask the ISPs to take necessary measures if they find infringement. If the ISP does not do so, it shall also bear joint liability for the enlarged damages.

Service Inventions

According to the current Article 6 of the Chinese patent law, service invention-creation includes an invention-creation made by a person in execution of the tasks of the entity to which he belongs or made by him mainly by using the material and technical means of the entity. For a service invention-creation, the right to apply for a patent belongs to the entity and after the application is approved, the entity is the patentee. The new draft redefines "service invention-creation" by limiting it to those made by a person in execution of the tasks of the entity to which he belongs.

The new draft further proposes that in respect of an invention-creation made by a person using the material and technical means of an entity to which he belongs, where the entity and the inventor or creator have a contract in which the right to apply for and own a patent is provided for, such provisions shall apply and in absence of such a contract, the right to apply for a patent belongs to the inventor or creator. Moreover, the new draft further proposes that under this circumstance, if the contract provides that the right to apply for a patent belongs to the entity, the entity must award the inventor or creator a reward after the patent right is granted, and in addition pay the inventor or creator remuneration upon exploitation of the patent.

All in all, the new draft amendment to the Chinese patent law reflects the changing IP landscape in China and the demand from mainly the Chinese users of the patent system. It is reasonable to believe the proposed amendment will bring positive changes to the Chinese patent system.

By Stephen Yang (Mr.)
Partner, Patent Attorney

Peksung Intellectual Property Ltd.
908 Shining Tower, 35 Xueyuan Road,
Haidian District, Beijing 100191, China
Tel: 86-10-8231 1199 Fax: 86-10-8231 1780
Email: yyong@peksung.com; mail@peksung.com
Website: www.peksung.com

This article first appeared in INTA 2015 issue of Asia IP, published byApex Asia Media.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Tee & Howe Intellectual Property Attorneys
CCPIT Patent & Trademark Law Office
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Tee & Howe Intellectual Property Attorneys
CCPIT Patent & Trademark Law Office
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions